Cosmetics Business reveals the 5 biggest beauty M&A trends of 2019 in new report

Beauty M&A is still thriving. Which brands and segments will top acquirers' shopping lists this year?

Market overview: At a glance

What's in this report?

Introduction

Top 5 trends:

1. Clean demand

2. Target categories

3. Beauty tech

4. Who's next?

5. Brand incubation

Country highlights

Summary & Growth Areas


Source: Capstone Headwaters


Key market challenges addressed

The rise of direct-to-consumer brands like Glossier, Anastasia Beverly Hills, The Ordinary and Drunk Elephant has revolutionised the beauty industry – and the resulting competition placed on the major corporates has prompted a surge in M&A activity over the past five years.

Transactions have become more numerous and higher in value and challenges have arisen for potential acquirers as a result.

Susan Babinsky, Senior Vice President of Kline Group, says: “The flurry of M&A activity over past several years has reduced the pipeline of good sized opportunities (eg $100m- plus brands or companies) thus companies are snatching up small and sometimes less proven businesses – often for quite a premium.

Drunk Elephant is rumoured to be exploring billion-dollar sale deals

“When gem M&A candidates do come along – such as the current Nestlé Skin Health Consumer Business (comprised of Cetaphil skin care, Proactiv acne treatment and Differin, an OTC switch acne drug) – expect a very nice multiple to be paid by the strategic buyer (such as P&G, L’Oréal, Coty, etc) who is likely bidding for this business.”

Rising deal values are also sparking an emerging trend for beauty corporates to incubate their own new brands, particularly in the area of natural and sustainable beauty, creating branding that is entirely separate from the corporate identity, with a focus on faster-to-market product development and on creating consumer communities.

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